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ACQUISITION OF STRATEGIC INTEREST IN BFS CAPITAL BY HCI

BFS CAPITAL IS PLEASED TO ANNOUNCE A SHARE ISSUE IN THE AMOUNT OF R95 MILLION, WHICH SHARES WILL BE SUBSCRIBED FOR BY HCI AND THE EXECUTIVE MANAGEMENT OF BFS CAPITAL, WITH EFFECT FROM APRIL 1, 1998. THE CAPITAL BASE WILL, AS A RESULT OF THE SHARE ISSUE, INCREASE TO R120 MILLION.

HCI WILL OBTAIN AN INTEREST OF 30% IN BFS CAPITAL FOR APPROXIMATELY R72 MILLION. AFTER THE SHARE ISSUE THE NEW SHAREHOLDING IN BFS CAPITAL WILL BE AS FOLLOWS:

BFS CAPITAL EXECUTIVE MANAGEMENT AND STAFF 40%

HCI 30%

NBSB 30%

HCI WILL APPOINT THE CHAIRMAN OF THE BFS CAPITAL BOARD.

THE TRANSACTION IS SUBJECT TO APPROVAL BY THE RELEVANT REGULATORY BODIES. BFS CAPITAL

BFS CAPITAL PROVIDES SPECIALISED DEBT AND EQUITY FINANCE SERVICES TO MANY LEADING COMPANIES IN SOUTHERN AFRICA, OPERATING FROM JOHANNESBURG AND CAPE TOWN. THE RANGE OF SERVICES OFFERED INCLUDE CORPORATE AND STRUCTURED FINANCE, PROPERTY FINANCE AND SPECIALISED TREASURY PRODUCTS. THE INITIAL SHAREHOLDERS WERE BFS CAPITAL EXECUTIVE MANAGEMENT AND STAFF (40%) AND NBSB (60%).

NBSB HAS RECENTLY SOLD 10% OF ITS SHAREHOLDING IN BFS CAPITAL TO MANAGEMENT SUBJECT TO APPROVAL BY THE REGISTRAR OF BANKS.

HCI

HCI IS A LISTED INVESTMENT HOLDING COMPANY CONTROLLED BY THE INVESTMENT TRUSTS OF THE MINEWORKERS UNION, AND THE CLOTHING AND TEXTILE WORKERS UNION, WITH A MARKET CAPITALISATION IN EXCESS OF R3 BILLION. HCI HAS HIGH QUALITY INVESTMENTS IN INFORMATION TECHNOLOGY, FINANCIAL SERVICES, MEDIA, TELECOMMUNICATIONS AND GAMING. HCI`S INVESTMENT OBJECTIVE IS TO ACQUIRE STRATEGIC STAKES IN WELL-MANAGED BUSINESSES WITH STRONG GROWTH POTENTIAL.

NBSB

NBSB WILL BE PART OF SOUTH AFRICA`S FOURTH LARGEST BANKING GROUP, WITH A MARKET CAPITALISATION OF R31 BILLION. NBSB IS PART OF THE PROPOSED RESTRUCTURE BY BOE, WHICH WILL RESULT IN THE COMBINED INTERESTS OF BOE, ORION SELECTIONS HOLDINGS, ORION SELECTIONS AND NBSB RATIONALISED TO FORM ONE FOCUSED INVESTMENT BANKING GROUP WITH SUBSTANTIAL REPRESENTATION IN THE FULL RANGE OF FINANCIAL SERVICES INCLUDING BANKING, LIFE ASSURANCE, ASSET MANAGEMENT AND STRATEGIC INVESTMENTS. RELATIONSHIP WITH HCI

DURING THE PAST YEAR, BFS CAPITAL HAS ACTED AS CORPORATE ADVISOR TO HCI IN A NUMBER OF TRANSACTIONS AND A STRONG RELATIONSHIP HAS DEVELOPED BETWEEN THE TWO COMPANIES. HCI CONTRIBUTES SUBSTANTIAL DEAL FLOW TO BFS CAPITAL, AND BY PROVIDING FINANCIAL EXPERTISE TO HCI, BFS CAPITAL HAS AND CONTINUES TO CONTRIBUTE TO THE CONTINUED GROWTH OF HCI.

FINANCIAL EFFECTS OF THE TRANSACTION ON HCI AND NBSB ASSUMING THAT THE TRANSACTION WAS EFFECTIVE AS AT 1 APRIL 1997, THERE WOULD HAVE BEEN NO MATERIAL IMPACT ON THE NET ASSET VALUE AND EARNINGS PER SHARE OF BOTH HCI AND NBSB.

FUTURE PROSPECTS FOR BFS CAPITAL

THE TRANSACTION WILL NOT ONLY SERVE TO STRENGTHEN THE RELATIONSHIP BETWEEN BFS CAPITAL AND HCI, BUT WILL ALSO PROVIDE BFS CAPITAL WITH AN ADEQUATE CAPITAL BASE TO FACILITATE THE EXPANSION OF ITS ACTIVITIES INTO OTHER NICHE FINANCIAL SERVICES. SEVERAL OPPORTUNITIES HAVE ALREADY BEEN IDENTIFIED AND ARE CURRENTLY BEING EXPLORED.

IT IS ANTICIPATED THAT BFS CAPITAL WILL APPLY FOR A MAIN BOARD LISTING ON THE JOHANNESBURG STOCK EXCHANGE IN THE NEAR FUTURE.

Source: NBS BOLAND / HCI